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Fed Under Pressure to Bring Down Interest Rates
Fed Chairman Jerome Powell has given several indications regarding the upcoming reduction in the federal policy rate himself. He has stated that the banking regulator needs to stop the Quantitative Tightening (QT) process that it started a couple of years ago.
QT refers to a gradual increase in interest rates to reduce inflation and eliminate excess market supply. QT is the opposite of Quantitative Easing, which aims to inject additional supply into the market to provide the spark needed for a stagnant or slow economy.
September’s rate cut of 0.25% is expected to be the first of multiple policy rate revisions in the coming months. Powell has been under considerable pressure from President Donald Trump regarding these rate cuts, and it looks like he has finally decided in favor of them.
However, this time, efforts to make an effective policy rate decision have been hit by a data blackout caused by the ongoing US government shutdown. The almost month-long governing crisis has been prolonged due to a prevailing lack of agreement between the White House and Congress. Without accurate data, the Department of Labor may not be able to provide a precise inflation figure in the form of the CPI, and without that, an informed rate cut could be challenging as well.
 
Bitcoin to a New ATH?
These rate cuts are likely to boost markets, including the digital currency sector, but the positive development tends to fade quickly.
However, the actual development could be a lot different based on recent experiences. In September, the first 25-basis-point rate cut occurred, and Bitcoin rose to new highs due to anticipation. However, the bulls were unable to maintain their momentum, and the index suffered a 6% price correction in the immediate aftermath.
So, while a new ATH is very much on the cards right now, the bulls have had an October to forget, and they need to start posting consistent gains if they want to save the bullish case for the foreseeable future.